Cadbury is a great British company. It makes chocolate we love, but, more important, it embodies a noble tradition in British capitalism. It is innovative and cares for workers and customers alike. The legacy of the 19th-century worker housing in Bourneville, created by the Quaker Cadbury family, is tribute to its moral approach to capitalism. It accepts the responsibilities and obligations of ownership along with the primacy of business purpose, even if ever more sparingly. Yet in a few months' time, it could join the long roll call of independent British companies swallowed up by hostile foreign bidders, on this occasion the American processed cheesemaker Kraft, now making an unwanted £9.8bn bid. It won't just be a company that will disappear, but part of our hinterland and culture. For what?

For all my adult life, I have had to put up with the City's argument that ownership does not matter. Britain's destiny was to be an economic version of Wimbledon, a great British institution, but owned by foreigners. British players rarely win the world's greatest tennis tournament – but for a fortnight it brings in the crowds and the tennis elite. So equally the British should be happy that the City is the world's greatest financial centre, even if the numbers of British-owned companies keep dwindling. What matters is the economic activity, not the ownership.

But ownership matters, whatever the investment bankers claim. It shapes the structure and character of economic activity. Anyone who doubts should ponder the fate of P&O, recently taken over by Dubai World. At the time, London financial opinion mocked the US government for taking the fuddy duddy view that it did not want key American ports owned by P&O to fall into the hands of a company whose financing and corporate governance was opaque.

Last week, Dubai World was forced to suspend its debt payments, prompting the biggest fall in world stock markets since March. Will P&O be sold? Will it be starved of investment? Milked for cash? The investment bankers who sold it to Dubai World saying ownership does not matter have long moved on, together with their bonuses. Only British mariners care, along with anybody who thought a company that took two centuries to build deserved a better fate. But no one in Britain gives a fig.

City minister Lord Myners recently said that it is easier to buy a British company than one registered anywhere else in the world. British share ownership carries no legal or cultural responsibilities. Companies have no powers to require their owners to engage with them, to be "good" owners or share in strategic choices. Shareholders only have rights – to buy and sell when they choose, to vote at annual general meetings and receive dividends.

Competition authorities take no interest in the dynamic and cultural consequences of corporate gigantism. As long as market share is below the 30% threshold deemed to signify mechanical monopoly, nothing matters. It is a charter for takeovers, investment bank bonuses – and a grossly unbalanced, underperforming economy.

Cadbury's fate once taken over is foretold. I remember, while reporting for BBC2's Newsnight in 1988, making a film about Rowntree fighting for its life against a hostile bid from Nestlé. It was obvious that Nestlé would take Rowntree's production abroad, run down the 33,000-strong British workforce and that a great British company would be no more. Nestlé, by contrast, was impregnable to takeover in its Swiss citadel.

So it has proved. The same future lies ahead for Cadbury if Kraft is successful. Irene Rosenfeld, Kraft's CEO, needs a story to tell her shareholders about how she intends to grow the lumbering conglomerate. Buying Cadbury is her throw of the dice. She will close British factories and route production through other Kraft plants around world. Marketing, design and finance functions can be assumed by Kraft. Cadbury in a decade's time will be a ghost of itself. Rosenfeld will hold on to her job for a few more years; the hedge funds now owning 14% of Cadbury's share will make a killing. Everyone else will be the poorer.

I have never thought capitalism needs to be done like this and last week came an unexpected ally. At the launch of his new thinktank ResPublica, "red Tory" Phillip Blond, basking in David Cameron's approval, said that one of the three cornerstones of a new conservatism was the moralised market. He fiercely criticised the tendency to size and monopoly in unregulated free markets in which the only criteria was narrow static economic efficiency. There needed to be more diversity and genuine competition. Small was beautiful. A libertarian view of the world, he said, had allowed too many mergers to go through.

Blond is right, but so far neither the Conservative party nor the Labour government has spoken. The trade unions have agitated but found little purchase on public opinion. And a member of the Cadbury family – Peter – has written to the Times saying that it is a disgrace that Kraft has cannily timed its bid, delaying its offer to the very last minute under the takeover rules, in order to destabilise Cadbury's share register. Many long-term shareholders were tempted to sell, he argued, to take a certain profit rather than commit to the company or wait for the bid details. The new owners are hedge funds and short-term speculators who have zero interest in the company, but every interest in maximising short-term capital gains by selling out.

Companies defending themselves against a hostile bid rarely succeed for just this reason. Lord Myners needs support from the chancellor and the prime minister if he is to achieve any change. Peter Cadbury, an expert in corporate finance, believes that in hostile bids only owners at the time of the bid should be enfranchised to vote, not those who opportunistically buy after the bid is announced hoping for an auction to drive the share price up. That is the least that could be done and the government should introduce the necessary legislation now.

But mostly Britain needs to overhaul how ownership is approached and competition conceived. Privileges should be afforded long-term owners. Share ownership should not just be about buying, selling and receiving dividends; it should be about owning and accepting the obligations of ownership. Up to 20% of shares should be set aside by law for employees.

Recently, a politician was quoted in the Guardian: "We don't make anything anymore, we don't own anything anymore. It's an absolute disgrace. The country's just knackered. People have given up hope. They don't believe in anything, not in themselves, not in their neighbours, not in their history." He is Bob Bailey, leader of the BNP on Barking council. The BNP's racist policies are anathema. If the BNP is to be opposed by decent politicians of left and right, they must have something to argue that makes sense in working-class communities and letting Cadbury go without a whimper is just more grist to the BNP mill.

It is no good running our economy and society around the interests of 5,000 bankers and would-be foreign companies who want to make hostile takeovers. It is a sign of the bankruptcy of the liberal left that it falls to Phillip Blond to make the principled but liberal case about what kind of capitalism we want. And if mainstream politicians will not speak for Britain, extremists will.